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  • By The Financial District

East-West Trade War Shifts From Fossil Fuels To Metals

The global trade war will shift from fossil fuels to metals and raw materials. Russia’s invasion of Ukraine highlighted the risk of relying on autocratic states for energy.

Photo Insert: Europe doesn’t currently mine an ounce of lithium -a key electric-vehicle battery component.

Even if Europe’s gas crisis eases, Western manufacturers’ focus will switch to reducing China’s dominance in materials key to a cleaner economy, Lisa Jucca wrote for Breakingviews of Reuters.

Europe needs to cumulatively spend $5.3 trillion on clean energy projects by 2050. That requires a sixfold increase in the global production of copper, lithium, graphite, nickel and some rare earths by 2040, International Energy Agency (IEA) estimates show.

China refines 58% of lithium produced globally, 65% of cobalt and over 33% of nickel and copper. Russia is also big in nickel, palladium and cobalt. Europe, which imports between 75% and 100% of most metals, is hugely vulnerable.

In 2019, China accounted for 64% of the global production of graphite, 60% of rare earth elements, 13% of lithium and 8% of copper.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

China accounts for 87% of the global refining and processing of rare earth elements, 65% of cobalt, 58% of lithium, and 40% of copper.

In response, Western companies can strike deals with suppliers in friendly countries, open mines at home, or boost recycling. The first approach is the fastest and is underway. In 2022 carmakers have ramped up partnerships with mines and invested directly in mining projects, data from Fitch Solutions show.

Government & politics: Politicians, government officials and delegates standing in front of their country flags in a political event in the financial district.

General Motors took a stake in Australia’s Queensland Pacific Metals to secure nickel and cobalt for green SUVs. Opening new mines at home looks safer but takes longer. Take lithium. Europe doesn’t currently mine an ounce of the key electric-vehicle battery component. And the US only supplies 2% of global demand. But things are changing.

Sibanye Stillwater is aiming to operate Europe’s first lithium mine in Finland in 2025; France’s Imerys is seeking to extract 34,000 tons of lithium hydroxide annually from a mine opening in 2028. If all European lithium mining projects transpire, they could supply around 40% of THE demand of 600,000 tons of lithium carbonate equivalent a year by 2030.

Market & economy: Market economist in suit and tie reading reports and analysing charts in the office located in the financial district.

The US, which only holds 3% of lithium reserves, has passed a law to subsidize domestic extraction of materials. The best option is to recycle metals from used appliances. Companies like Umicore and Redwood Materials already own the technology to reuse batteries and smartphones.

Europe recycles 17% of the globe’s battery production. But this share will rise to 48% by 2025, Fitch Solutions suggests.

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